Kimberly-Clark Announces Full-Year 2023 Results And 2024 Outlook
Achieved net sales of
Company initiates financial outlook for 2024 reflecting continued momentum
"We had a solid finish to 2023, delivering strong organic growth as well as cost and earnings recovery above our initial expectations," said
Hsu continued, "We enter 2024 having advanced the Company's strategic foundation and financial position, and with confidence this phase of cost recovery and supply chain stabilization is largely behind us. Moving forward, we will continue to invest in differentiating our brands and enhancing our capabilities while we maintain a disciplined cost structure in our next phase of growth. I'm confident we are positioned to accelerate and enhance the performance of our business and create meaningful shareholder value as we deliver our purpose of better care for a better world."
The company intends to hold an Investor Day in late March to detail its strategic priorities and key initiatives underpinning its vision for the future.
Quarter Highlights
- Delivered net sales of
$5.0 billion , in line with prior year, with organic sales growth of 3 percent. - Gross margin was 34.9 percent, up 210 basis points versus the prior year, driven by favorable net revenue realization and productivity.
- Diluted earnings per share were
$1.50 ; adjusted earnings per share were$1.51 , down 2 percent versus prior year.
Fourth Quarter 2023 Results
Fourth quarter sales of
In
Gross margin improved by 210 basis points to 34.9 percent, with higher net revenue realization, cost savings and favorable input costs partially offset by unfavorable currency impacts and higher other manufacturing costs. Gross profit grew 7 percent including
Fourth quarter operating profit was $670 million compared to
Net interest expense was
Fourth quarter effective tax rate was 25.2 percent, higher than 22.5 percent in the prior year. On an adjusted basis, the effective rate in the fourth quarter was 25.2 percent, compared to 22.6 percent in the prior year period.
Net income of equity companies was $53 million compared to
Diluted EPS was in line with prior year at
Full-Year 2023 Results
In 2023, sales of
Gross margin improved by 360 basis points to 34.4 percent and adjusted gross margin improved by 370 basis points to 34.5 percent reflecting higher net revenue realization as well as cost savings from its FORCE program of
Full-year operating profit was
Full-year adjusted operating profit was
In 2023, diluted earnings per share were
The company's 2023 results exceeded its initial outlook at the start of its fiscal year and were consistent with its most recent outlook as follows:
Metric |
|
|
2023 Results |
|||
Organic sales growth |
2% - 4% |
4% - 5% |
5 % |
|||
FX impact(a) on net sales |
(2) % |
~(3)% |
(3) % |
|||
Acquisition/(divestiture) impact on net sales |
NA |
~(1)% |
(1) % |
|||
Net sales growth |
0% - 2% |
1% - 2% |
1 % |
|||
Adjusted operating margin |
NA |
up 170 bps |
+150 bps |
|||
Adjusted operating profit |
up mid-to-high single |
NA |
13 % |
|||
Input cost impact on operating profit ($ million) |
|
|
|
|||
Other manufacturing cost ($ million) |
NA |
|
|
|||
FORCE savings ($ million) |
similar to prior year |
|
|
|||
FX impact(b) on operating profit ($ million) |
|
~( |
|
|||
Net interest expense |
NA |
down high single |
down 15% |
|||
Adjusted effective tax rate |
23% - 25% |
23% - 24% |
23.2 % |
|||
Income from equity companies |
similar to prior year |
NA |
up 69% |
|||
Adjusted EPS vs. last year |
2% - 6% |
15% - 17% |
up 17% |
|||
Share repurchases ($ million) |
|
|
|
|||
Capital expenditure ($ million) |
|
|
|
(a) Currency translation only |
(b) Currency transaction and translation impacts |
Business Segment Net Sales Results
Q4 change vs year ago (%) |
Volume |
Price |
Mix/Other |
Exited |
Currency |
Total(b) |
Organic(c) |
|||||||
Personal Care |
1 |
4 |
1 |
— |
(4) |
2 |
6 |
|||||||
|
4 |
— |
1 |
— |
— |
5 |
5 |
|||||||
D& |
(1) |
9 |
2 |
— |
(12) |
(3) |
9 |
|||||||
Developed Markets |
(3) |
3 |
1 |
— |
3 |
4 |
— |
|||||||
Consumer Tissue |
(1) |
1 |
— |
(3) |
1 |
(1) |
— |
|||||||
|
2 |
1 |
— |
— |
— |
3 |
3 |
|||||||
D& |
(8) |
1 |
— |
(15) |
— |
(22) |
(7) |
|||||||
Developed Markets |
(1) |
1 |
— |
— |
5 |
6 |
1 |
|||||||
KC Professional |
(4) |
2 |
2 |
(2) |
— |
(3) |
(1) |
|||||||
|
(6) |
2 |
1 |
— |
— |
(3) |
(3) |
|||||||
D& |
(3) |
8 |
1 |
(13) |
(5) |
(11) |
6 |
|||||||
Developed Markets |
(1) |
(4) |
6 |
— |
5 |
6 |
1 |
|||||||
Consolidated |
— |
2 |
1 |
(1) |
(2) |
— |
3 |
|||||||
Full-year change vs year ago |
Volume |
Price |
Mix/Other |
Exited |
Currency |
Total(b) |
Organic(c) |
|||||||
Personal Care |
(1) |
5 |
1 |
— |
(5) |
1 |
5 |
|||||||
|
1 |
2 |
— |
— |
— |
4 |
4 |
|||||||
D& |
(4) |
9 |
2 |
— |
(11) |
(4) |
7 |
|||||||
Developed Markets |
(5) |
6 |
1 |
— |
(2) |
— |
3 |
|||||||
Consumer Tissue |
(3) |
6 |
— |
(2) |
(1) |
1 |
3 |
|||||||
|
— |
5 |
— |
— |
— |
5 |
5 |
|||||||
D& |
(9) |
7 |
— |
(8) |
(3) |
(13) |
(2) |
|||||||
Developed Markets |
(5) |
9 |
— |
— |
(1) |
4 |
4 |
|||||||
KC Professional |
(5) |
10 |
1 |
(1) |
(1) |
5 |
7 |
|||||||
|
(2) |
9 |
— |
— |
— |
8 |
8 |
|||||||
D& |
(5) |
10 |
1 |
(6) |
(6) |
(5) |
6 |
|||||||
Developed Markets |
(13) |
13 |
4 |
— |
— |
4 |
4 |
|||||||
Consolidated |
(2) |
6 |
1 |
(1) |
(3) |
1 |
5 |
(a) |
Impact of the sale of |
(b) |
Total may not equal the sum of volume, net price, mix/other, acquisition and currency due to rounding and excludes intergeographic sales. |
(c) |
Combined impact of changes in volume, net price and mix/other. |
Personal Care Segment
Personal Care sales of
Fourth-quarter operating profit of
Consumer Tissue Segment
Consumer Tissue sales of
Fourth-quarter operating profit of
K-C Professional (KCP) Segment
KCP sales of
2-year average organic growth in Q4 was 8 percent. Improved product mix and revenue realization were offset by lower volumes. Strategic investments are driving elevated consumer experiences and healthy demand in the segment. For the full year, sales were up 5 percent driven by an organic increase of 7 percent.
Fourth-quarter operating profit of
Cash Flow and Balance Sheet
Full-year cash provided by operations was
2024 Outlook
The company currently expects to deliver a low-to-mid single digit percentage increase in 2024 Organic
This outlook reflects assumptions subject to change given the macro environment.
Supplemental Materials and Live Webcast
Supplemental materials will be available at approximately
2024 Investor Day
Kimberly-Clark plans to host an Investor Day in
The event will also be webcast and accessible from the Events & Presentations section of the company's website. A replay of the webcast and slides shown during the presentations will be available on the company's website.
About Kimberly-Clark
Kimberly-Clark (NYSE: KMB) and its trusted brands are an indispensable part of life for people in more than 175 countries and territories. Fueled by ingenuity, creativity, and an understanding of people's most essential needs, we create products that help individuals experience more of what's important to them. Our portfolio of brands, including Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Plenitud, Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2 share positions in approximately 70 countries. We use sustainable practices that support a healthy planet, build strong communities, and ensure our business thrives for decades to come. We are proud to be recognized as one of the World's Most Ethical Companies(R) by
Copies of Kimberly-Clark's Annual Report to Stockholders and its proxy statements and other
Forward Looking Statements
Certain matters contained in this news release concerning the outlook, anticipated financial and operating results, raw material, energy and other input costs, anticipated currency rates and exchange risks, including in
There can be no assurance that these future events will occur as anticipated or that the company's results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. For a description of certain factors that could cause the company's future results to differ from those expressed in any such forward-looking statements, see Item 1A entitled "Risk Factors" in the company's Annual Report on Form 10-K for the year ended
Non-GAAP Financial Measures
This news release and the accompanying tables include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the
- Adjusted earnings and earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
These non-GAAP financial measures exclude the following items for the relevant time periods as indicated in the accompanying non-GAAP reconciliation tables:
- Sale of
Brazil tissue and K-C Professional business. In the second quarter of 2023, we recognized a net benefit related to the sale of ourBrazil tissue and K-C Professional business. - Impairment of intangible assets. In the second quarter of 2023, we recognized non-cash charges related to the impairment of certain intangible assets related to Softex Indonesia and Thinx.
- Pension settlements. In 2022 and 2023, we recognized pension settlement charges related to lump-sum distributions from pension plan assets exceeding the total of annual service and interest costs resulting in a recognition of deferred actuarial losses.
- Acquisition of controlling interest in Thinx. In the first quarter of 2022, the company completed the acquisition of a majority and controlling share of Thinx. As a result of this transaction, a net benefit was recognized primarily due to the nonrecurring, non-cash gain recognized related to the remeasurement of the carrying value of previously held equity investment to fair value partially offset by transaction and integration costs.
The company provides these non-GAAP financial measures as supplemental information to our GAAP financial measures. Management and the company's Board of Directors use adjusted earnings, adjusted earnings per share and adjusted gross and operating profit to (a) evaluate the company's historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources and (c) measure the operational performance of the company's business units and their managers. Management also believes that the use of an adjusted effective tax rate provides improved insight into the tax effects of our ongoing business operations.
Additionally, the
This news release includes information regarding organic sales growth, which describes the impact of changes in volume, net selling prices and product mix on net sales. Changes in foreign currency exchange rates, acquisitions and exited businesses also impact the year-over-year change in net sales.
|
|||||
CONSOLIDATED INCOME STATEMENTS |
|||||
(Millions, except per share amounts) |
|||||
Three Months Ended |
|||||
2023 |
2022 |
Change |
|||
|
$ 4,970 |
$ 4,964 |
— |
||
Cost of products sold |
3,233 |
3,337 |
-3 % |
||
Gross Profit |
1,737 |
1,627 |
+7 % |
||
Marketing, research and general expenses |
993 |
916 |
+8 % |
||
Other (income) and expense, net |
74 |
(1) |
N.M. |
||
Operating Profit |
670 |
712 |
-6 % |
||
Nonoperating expense |
(18) |
(24) |
-25 % |
||
Interest income |
32 |
7 |
+357 % |
||
Interest expense |
(70) |
(76) |
-8 % |
||
Income Before Income Taxes and Equity Interests |
614 |
619 |
-1 % |
||
Provision for income taxes |
(155) |
(139) |
+12 % |
||
Income Before Equity Interests |
459 |
480 |
-4 % |
||
Share of net income of equity companies |
53 |
35 |
+51 % |
||
Net Income |
512 |
515 |
-1 % |
||
Net income attributable to noncontrolling interests |
(3) |
(8) |
-63 % |
||
Net Income Attributable to |
$ 509 |
$ 507 |
— |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 1.51 |
$ 1.50 |
+1 % |
||
Diluted |
$ 1.50 |
$ 1.50 |
— |
||
Cash Dividends Paid |
$ 1.18 |
$ 1.16 |
+2 % |
||
Common Shares Outstanding |
|
||||
2023 |
2022 |
||||
Outstanding shares as of |
337.0 |
337.5 |
|||
Average diluted shares for three months ended |
339.0 |
338.5 |
|||
N.M. - Not Meaningful |
Unaudited |
|
|||||
CONSOLIDATED INCOME STATEMENTS |
|||||
(Millions, except per share amounts) |
|||||
Twelve Months Ended |
|||||
2023 |
2022 |
Change |
|||
|
$ 20,431 |
$ 20,175 |
+1 % |
||
Cost of products sold |
13,399 |
13,956 |
-4 % |
||
Gross Profit |
7,032 |
6,219 |
+13 % |
||
Marketing, research and general expenses |
3,961 |
3,581 |
+11 % |
||
Impairment of intangible assets |
658 |
— |
N.M. |
||
Other (income) and expense, net |
69 |
(43) |
N.M. |
||
Operating Profit |
2,344 |
2,681 |
-13 % |
||
Nonoperating expense |
(96) |
(73) |
+32 % |
||
Interest income |
66 |
14 |
+371 % |
||
Interest expense |
(293) |
(282) |
+4 % |
||
Income Before Income Taxes and Equity Interests |
2,021 |
2,340 |
-14 % |
||
Provision for income taxes |
(453) |
(495) |
-8 % |
||
Income Before Equity Interests |
1,568 |
1,845 |
-15 % |
||
Share of net income of equity companies |
196 |
116 |
+69 % |
||
Net Income |
1,764 |
1,961 |
-10 % |
||
Net income attributable to noncontrolling interests |
— |
(27) |
-100 % |
||
Net Income Attributable to |
$ 1,764 |
$ 1,934 |
-9 % |
||
Per Share Basis |
|||||
Net Income Attributable to |
|||||
Basic |
$ 5.22 |
$ 5.73 |
-9 % |
||
Diluted |
$ 5.21 |
$ 5.72 |
-9 % |
||
Cash Dividends Declared |
$ 4.72 |
$ 4.64 |
+2 % |
||
Common Shares Outstanding |
|
||||
2023 |
2022 |
||||
Average diluted shares for twelve months ended |
338.8 |
338.3 |
|||
N.M. - Not Meaningful |
2023 Data is Unaudited |
|
||||||
NON-GAAP RECONCILIATIONS |
||||||
(Millions, except per share amounts) |
||||||
Three Months Ended |
||||||
As Reported |
Pension |
As Adjusted Non-GAAP |
||||
Nonoperating expense |
$ (18) |
$ (4) |
$ (14) |
|||
Provision for income taxes |
(155) |
1 |
(156) |
|||
Effective tax rate |
25.2 % |
— |
25.2 % |
|||
Net Income Attributable to |
509 |
(3) |
512 |
|||
Diluted Earnings per Share(a) |
1.50 |
(0.01) |
1.51 |
|||
Three Months Ended |
||||||
As Reported |
Pension |
As Adjusted Non-GAAP |
||||
Nonoperating expense |
$ (24) |
$ (18) |
$ (6) |
|||
Provision for income taxes |
(139) |
5 |
(144) |
|||
Effective tax rate |
22.5 % |
— |
22.6 % |
|||
Net income attributable to |
507 |
(13) |
520 |
|||
Diluted earnings per share(a) |
1.50 |
(0.04) |
1.54 |
(a) |
"As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding. |
Unaudited |
|
||||||||||||
NON-GAAP RECONCILIATIONS |
||||||||||||
(Millions, except per share amounts) |
||||||||||||
Twelve Months Ended |
||||||||||||
As Reported |
Sale of K-C |
Impairment of |
Pension |
As Adjusted Non-GAAP |
||||||||
Cost of products sold |
$ 13,399 |
$ 15 |
$ — |
$ — |
$ 13,384 |
|||||||
Gross Profit |
7,032 |
(15) |
— |
— |
7,047 |
|||||||
Marketing, research and general expenses |
3,961 |
15 |
— |
— |
3,946 |
|||||||
Impairment of intangible assets |
658 |
— |
658 |
— |
— |
|||||||
Other (income) and expense, net |
69 |
(74) |
— |
— |
143 |
|||||||
Operating Profit |
2,344 |
44 |
(658) |
— |
2,958 |
|||||||
Nonoperating expense |
(96) |
— |
— |
(35) |
(61) |
|||||||
Provision for income taxes |
(453) |
(18) |
175 |
9 |
(619) |
|||||||
Effective tax rate |
22.4 % |
— |
— |
— |
23.2 % |
|||||||
Net income attributable to noncontrolling interests |
— |
— |
20 |
— |
(20) |
|||||||
Net Income Attributable to |
1,764 |
26 |
(463) |
(26) |
2,227 |
|||||||
Diluted Earnings per Share(a) |
5.21 |
0.08 |
(1.36) |
(0.08) |
6.57 |
|||||||
Twelve Months Ended |
||||||||||||
As Reported |
Acquisition of |
Pension |
As Adjusted Non-GAAP |
|||||||||
Marketing, research and general expenses |
$ 3,581 |
$ 21 |
$ — |
$ 3,560 |
||||||||
Other (income) and expense, net |
(43) |
(85) |
— |
42 |
||||||||
Operating Profit |
2,681 |
64 |
— |
2,617 |
||||||||
Nonoperating expense |
(73) |
— |
(52) |
(21) |
||||||||
Provision for income taxes |
(495) |
4 |
13 |
(512) |
||||||||
Effective tax rate |
21.2 % |
— |
— |
22.0 % |
||||||||
Net Income Attributable to |
1,934 |
68 |
(39) |
1,905 |
||||||||
Diluted Earnings per Share(a) |
5.72 |
0.20 |
(0.12) |
5.63 |
(a) |
"As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding. |
|
||
Unaudited |
|
|||
CONSOLIDATED BALANCE SHEETS |
|||
(Millions) |
|||
|
|||
2023 |
2022 |
||
ASSETS |
|||
Current Assets |
|||
Cash and cash equivalents |
$ 1,093 |
$ 427 |
|
Accounts receivable, net |
2,135 |
2,280 |
|
Inventories |
1,955 |
2,269 |
|
Other current assets |
520 |
753 |
|
Total Current Assets |
5,703 |
5,729 |
|
Property, Plant and Equipment, Net |
7,913 |
7,885 |
|
Investments in Equity Companies |
306 |
238 |
|
|
2,085 |
2,074 |
|
Other Intangible Assets, Net |
197 |
851 |
|
Other Assets |
1,140 |
1,193 |
|
TOTAL ASSETS |
$ 17,344 |
$ 17,970 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current Liabilities |
|||
Debt payable within one year |
$ 567 |
$ 844 |
|
Trade accounts payable |
3,653 |
3,813 |
|
Accrued expenses and other current liabilities |
2,316 |
2,289 |
|
Dividends payable |
394 |
388 |
|
Total Current Liabilities |
6,930 |
7,334 |
|
Long-Term Debt |
7,417 |
7,578 |
|
Noncurrent Employee Benefits |
669 |
654 |
|
Deferred Income Taxes |
374 |
647 |
|
Other Liabilities |
860 |
799 |
|
|
26 |
258 |
|
Stockholders' Equity |
|||
|
915 |
547 |
|
Noncontrolling Interests |
153 |
153 |
|
Total Stockholders' Equity |
1,068 |
700 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 17,344 |
$ 17,970 |
2023 Data is Unaudited |
|
||||
CONSOLIDATED CASH FLOW STATEMENTS |
||||
(Millions) |
||||
Twelve Months Ended |
||||
2023 |
2022 |
|||
Operating Activities |
||||
Net income |
$ 1,764 |
$ 1,961 |
||
Depreciation and amortization |
753 |
754 |
||
Asset impairments |
676 |
— |
||
Gain on previously held equity investment in Thinx |
— |
(85) |
||
Stock-based compensation |
169 |
150 |
||
Deferred income taxes |
(322) |
(57) |
||
Net (gains) losses on asset and business dispositions |
(75) |
15 |
||
Equity companies' earnings (in excess of) less than dividends paid |
(59) |
6 |
||
Operating working capital |
582 |
(17) |
||
Postretirement benefits |
24 |
(4) |
||
Other |
30 |
10 |
||
Cash Provided by Operations |
3,542 |
2,733 |
||
Investing Activities |
||||
Capital spending |
(766) |
(876) |
||
Acquisition of business, net of cash acquired |
— |
(46) |
||
Proceeds from asset and business dispositions |
245 |
12 |
||
Investments in time deposits |
(720) |
(658) |
||
Maturities of time deposits |
815 |
797 |
||
Other |
8 |
(14) |
||
Cash Used for Investing |
(418) |
(785) |
||
Financing Activities |
||||
Cash dividends paid |
(1,588) |
(1,558) |
||
Change in short-term debt |
(371) |
261 |
||
Debt proceeds |
363 |
— |
||
Debt repayments |
(475) |
(312) |
||
Proceeds from exercise of stock options |
97 |
94 |
||
Acquisitions of common stock for the treasury |
(225) |
(100) |
||
Cash paid for redemption of common securities of Thinx |
(95) |
— |
||
Cash dividends paid to noncontrolling interests |
(35) |
(98) |
||
Other |
(45) |
(47) |
||
Cash Used for Financing |
(2,374) |
(1,760) |
||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(84) |
(31) |
||
Change in Cash and Cash Equivalents |
666 |
157 |
||
Cash and Cash Equivalents - Beginning of Period |
427 |
270 |
||
Cash and Cash Equivalents - End of Period |
$ 1,093 |
$ 427 |
Unaudited |
|
||||||||||||
SELECTED BUSINESS SEGMENT DATA |
||||||||||||
(Millions) |
||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||
2023 |
2022 |
Change |
2023 |
2022 |
Change |
|||||||
|
||||||||||||
Personal Care |
$ 2,602 |
$ 2,555 |
+2 % |
$ 10,691 |
$ 10,622 |
+1 % |
||||||
Consumer Tissue |
1,540 |
1,560 |
-1 % |
6,290 |
6,243 |
+1 % |
||||||
K-C Professional |
816 |
838 |
-3 % |
3,404 |
3,256 |
+5 % |
||||||
Corporate & Other |
12 |
11 |
N.M. |
46 |
54 |
N.M. |
||||||
TOTAL |
$ 4,970 |
$ 4,964 |
— |
$ 20,431 |
$ 20,175 |
+1 % |
||||||
OPERATING PROFIT |
||||||||||||
Personal Care |
$ 429 |
$ 423 |
+1 % |
$ 1,890 |
$ 1,787 |
+6 % |
||||||
Consumer Tissue |
269 |
239 |
+13 % |
976 |
806 |
+21 % |
||||||
K-C Professional |
151 |
163 |
-7 % |
665 |
457 |
+46 % |
||||||
Corporate & Other(a) |
(105) |
(114) |
N.M. |
(1,118) |
(412) |
N.M. |
||||||
Other (income) and expense, net(a) |
74 |
(1) |
N.M. |
69 |
(43) |
N.M. |
||||||
TOTAL OPERATING PROFIT |
$ 670 |
$ 712 |
-6 % |
$ 2,344 |
$ 2,681 |
-13 % |
(a) |
Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations. |
N.M. - Not Meaningful |
|
Unaudited |
[KMB-F]
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SOURCE
Investor Relations contact: Christopher Jakubik, CFA, KC.InvestorRelations@kcc.com; Media Relations contact: David Kellis, media.relations@kcc.com